USD/JPY Current price: 103.85

  • Wall Street trimmed losses ahead of the close, yields continue to advance.
  • Japanese data came in positive, but below previous reading.
  • USD/JPY eased from recent highs, but further declines are limited at this point.

The USD/JPY pair spent most of the day consolidating its latest gains, helped by the persistent strength of government bond yields. The yield on the benchmark 10-year note peaked at 1.19%, amid prevalent hopes for additional fiscal stimulus in the US. It later retreated modestly, to end the day at 1.17%. Wall Street opened the day with gains, and despite an intraday knee-jerk, ended up in the green, weighing on the dollar and sending USD/JPY sub-104.00.

Japan published the November Trade Balance, which posted a surplus of ¥616.1 billion, below the previous ¥971.1 billion. The Eco Watchers Survey on current business conditions came in at 35.5, beating expectations although below the previous 45.6. This Wednesday, the country will publish November Machinery Orders and the December Producer Price Index.

USD/JPY short-term technical outlook

The USD/JPY pair is trading around 103.90 ahead of the Asian opening. In the 4-hour chart, the pair has broken below a still bullish 20 SMA, although it remains above directionless 100 and 200 SMAs. Technical indicators have eased from their daily highs, the Momentum now holding flat above its 100 level and the RSI approaching its midline. The risk of a steeper decline will increase on a break below 103.50.

Support levels: 103.50 103.15 102.70

Resistance levels: 104.15 104.50 104.90  

View Live Chart for the USD/JPY

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